According to a recent survey by the German Engineering Federation (VDMA), in which 700 member companies from the mechanical and plant engineering sector - 165 of them from North Rhine-Westphalia - took part, three quarters (76 percent) of companies rate the urgency of reducing the bureaucratic burden as “very high”. A further 21 percent described it as “high”. This puts the reduction of bureaucracy ahead of the availability of qualified labour and energy prices in the ranking of necessary improvements.
“The mechanical and plant engineering industry is not only dealing with falling demand and a shortage of skilled labour, but is also suffering from the effects of a wide range of challenges, such as the implementation of EU regulations, excessive bureaucracy and a lack of planning certainty. These are all factors that have a negative impact on the competitiveness of our industry”, explains Hans-Jürgen Alt, Managing Director of VDMA NRW, adding: “For example, regulatory projects should also be measured by their impact on competitiveness.”
The global economy is currently going through a phase of weakness, the duration and intensity of which cannot yet be estimated. Due to lower incoming orders, VDMA NRW has set its real production estimate for 2023 at minus 2 percent - a decline in production of minus 2 percent is also expected for 2024. Due to ongoing inflation, the production forecast paints a more realistic picture than a non-price-adjusted sales forecast, which is distorted by the variable “inflation”.
Almost every second company expects a decline in revenue
The current global uncertainties are weighing on companies in the mechanical and plant engineering sector in North Rhine-Westphalia and are resulting in persistently weak new orders. Companies are currently still benefiting from their order backlogs, which are, however, declining due to falling new orders. 58 percent of companies currently have a lower order backlog than the long-term average. 23 percent of companies state that the current order backlog will not be able to support production in the coming year, 45 percent state “little support”.
This results in cautious sales expectations, which must be seen against the backdrop of inflation: 39 percent of respondents in NRW still expect nominal sales growth. 21 percent of the companies surveyed expect stagnation in the coming year. However, 41 percent expect a nominal decline in revenue in 2024.
One ray of hope is that the bottlenecks in the supply chains have eased considerably. The majority of respondents from North Rhine-Westphalia see no (18 percent) or only minor restrictions (60 percent). Companies do not expect the situation to worsen over the next three months: only 4 percent of respondents expect supply chain problems to increase, 76 percent expect restrictions to remain the same and 20 percent expect the situation to improve.
The problems with the procurement of electronic parts and components are still particularly pronounced. 43 percent of respondents rate these problems as serious or significant.
Shortage of skilled labour creates an additional burden
With almost 190,000 employees in around 1,600 companies, mechanical engineering is the largest industrial employer in North Rhine-Westphalia. At the end of September 2023, local companies employed almost 193,000 people in the domestic core workforce in companies with 50 or more employees. The search for new skilled workers is increasingly presenting companies with major challenges.
Almost 95 percent of NRW machinery and plant manufacturers report problems in the search for new employees, with 60 percent even reporting serious and noticeable bottlenecks in the selection of personnel. 26 percent of those surveyed fear that the situation will deteriorate in the next three months, while only 6 percent expect it to improve.
“Despite the difficulties in the international environment and the many challenges, we assume that their impact on mechanical and plant engineering and its production will be limited”, summarises Alt. “As an enabler and driving force, our industry will also find ways for a successful future here.”
